California's Mortgage Debt forgiveness slated to expire next year... Its to time to play strategic defaults and short sales

Mortgage Forgiveness Debt Relief Extended

Mortgage Forgiveness Debt Relief Extended - Updated 04/13/10

On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013.
New law - Taxable years 2009 through 2012

California law conforms, with modifications, to federal mortgage forgiveness debt relief for discharges that occurred in tax years 2007 through December 31, 2012. The amount of qualifying indebtedness is less than the federal amount and California imposes a state-only limitation on the total amount of relief excluded from gross income. The following summarizes the differences between the federal and California provisions. Federal provision applies to discharges occurring in 2007 through 2012, and:

Limits the amount of qualified principal residence indebtedness to $2,000,000 for taxpayers who file as married filing jointly, single, head of household, or widow/widower, and to $1,000,000 for taxpayers who file as married filing separately.
Does not limit the debt relief amount; it only limits the indebtedness amount used to calculate the debt relief amount.
See the federal law Mortgage Forgiveness Debt Relief Act and Debt Cancellation for more information.

California provision applies to discharges that occurred in 2007 through 2012, and:

California has a new short sale law. S B 931

Short Sale attorney, stop foreclosure, real estate attorney, short sales in San Diego. Orange County short sales

California dramatically changes Short Sale Law, in my opinion.
Senate Bill No. 931 is signed into Californial law by Govenor Schwarzeneger. This became California’s short sale law around the same time he vetoed a more expansive law. I think he did a great job.
And I think it will turn out to be great for homeowners who only have one loan on their on their residence. In my experience most short sales still seem to involve two loans. But as property values start to return to 1990s pricing, we are starting in some areas we are starting to see more owners who have only one loan. (This law will also prevent some strategic defaults, as myself an other foreclosure attorneys will have to advise fewer people that a foreclosure may be more air tight than their short sale approval letter.)

Foreclosure halt subprime debacle part two.

This is why you may wish to have a lawyer helping you leverage these facts during your short sale negotiations. 

1. A Mortgage is a Lien - a Note is promise to pay, the IOU.

2. In order to collect the money from the Note  there must be a chain of title saying that the entity collecting has a right to collect.  Otherwise the home owner could be paying one person and someone else forecloses.

3. Syndication split the revenue from Notes out to different investors.
Ownership of the note should have stayed with REMICs - but they could not keep ownership for bond rating reasons
MERS was set up to keep track of where money should go and to avoid paying local govt filing fees.
(Those filings would have notified borrowers who had a right to collect their payments - County attorneys are now suing the lenders for millions or billions of unpaid filing fees.)

4. Between MERS and the REMICs no one seems to have kept track of the legal chain of title of the ownership of the note.
Without proof of ownership (chain of title)  the servicer or the group who represents the "owners" probably has no right to collect on the note.  The theory is the real owner of the note might step up and collect later.  

5. Because of the sloppy and lying work being done by foreclosure mills, title insurers were no longer willing to provide the buyers of foreclosure with the title insurance they desired.

6. Even if they do, there will be some owners going back and challenging the foreclosure. 

7.  Finally the investors (like China) may want to give their investments back to the banks who had them invest in there money with a product which contained the MERS shams. 

Foreclosure Sales Account for 31 Percent of All Residential Sales in First Quarter According to New Report From RealtyTrac

foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process.

A total of 232,959 U.S. properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — sold to third parties in the first quarter, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales.

California Walk Away Plans and foreclosures

In mortgage market, ‘walkaway’ homeowners may be urban myth - Los Angeles Times

In mortgage market, ‘walkaway’ homeowners may be urban myth
Foreclosures

This article is an interesting. The title is deceptive. I would say 80% of my calls are from people who would walk away if they were not concerned about their credit. Of course when they learn about their exposure to deficiency judgments (for California real estate see - sold out juniors or judicial foreclosures) they become interested in short sales and deed in lieus.

The concept is also deceptive because my law partner found some stats which showed a very strong relationship between negative equity and foreclosures. And these stats were assembled prior to the current foreclosure "crisis".

Bad faith waste of a foreclosure property

Many people working in Real Estate in San Diego have seen nice homes in nice subdivisions trashed by homeowners who were subject to foreclosure actions. California homeowners should be aware that bad faith abuse and possibly even omissions to act could take the homeowner out of the protection anti-deficiency provision of California law.

Any deliberate impairment of the security (real estate for our purposes) and sometimes omissions causing impairment to the security could subject homeowners to deficiency proceedings.

Nashuatelegraph.com: Don’t look for help from lawmakers

Nashuatelegraph.com: Don’t look for help from lawmakers

Lawmakers seem to be taking a wait and see approach to the potential "mortgage crisis".

“We have an obligation to prevent fraud and abusive lending,” Federal Reserve Chairman Ben Bernanke said in a speech Tuesday. “At the same time, we must tread carefully so as not to suppress responsible lending or eliminate refinancing opportunities for subprime borrowers.”

However, John Robbins, chairman of the Mortgage Bankers Association, predicts foreclosures among borrowers with the riskiest credit will amount to 0.25 percent of U.S. mortgages.

“No seismic financial occurrence is about to overwhelm the U.S. economy,” Robbins said in a speech last month.

In keeping with the metaphor your blog reporter is starting to see some fault shaking in the florida real estate markets, particularly in bradenton and sarasota, but
as long as the lenders do not shut off the spigot I see plenty of buyers on the side line looking to scoop up short sales.